What is a Certificate of Deposit (CD) primarily known for in personal finance?

A Providing instant access to funds with no penalties.

B Offering higher interest rates in exchange for locking funds for a fixed term.

C Allowing unlimited transactions without fees.

D Primarily used for short-term borrowing.

✓ Correct Answer: Option B

Certificates of Deposit (CDs) are time deposits that typically offer higher interest rates than standard savings accounts because the money is committed for a specific period, with penalties for early withdrawal.

💡 Why is B) the correct answer?

The correct answer to the question "What is a Certificate of Deposit (CD) primarily known for in personal finance?" is Option B: Offering higher interest rates in exchange for locking funds for a fixed term..

The other options — A) Providing instant access to funds with no penalties., C) Allowing unlimited transactions without fees., D) Primarily used for short-term borrowing. — are incorrect for this General Knowledge question. As explained above: Certificates of Deposit (CDs) are time deposits that typically offer higher interest rates than standard savings accounts because the money is committed for a specific period, with penalties for earl…

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This 2-level General Knowledge question from the Abbreviations & Full Forms topic is part of One Paper Preparation's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free General Knowledge practice test or use flashcards for spaced repetition review.

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What is a Certificate of Deposit (CD) primarily known for in personal finance?

✓ Correct Answer: Option B

📚 About This General Knowledge Practice Question

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